Exchange rate for booking the imported invoices

AS 24095 views 13 replies

CA.B.Sivakumar

162 Points Joined September 2008

Dear Sir,

We're purchasing imported items for our manufacturing purposes. All import purchase are against 100% advance payment TT.

At the time of advance payment, the vendor account will be debited in INR value. The exchange rate of conversion is the rate given by the bank in thier payment advise.

DR VENDOR 1000$ @ 45 = 45000

CR BANK 1000$ @ 45 = 45000

After 1 month (say 08/08/02011 this is the bill of entry date) we are receiving the consignment, and taking delivery after paying the customs duty to commissioner of customs. Goods received by factory is on 15/08/2011.

Now my question is

1. While booking the invoice what is the exchange rate i should adopt? Whether the exchange rate as on 08/08/2011 is to be adopted or 15/08/2011 rate is to be adopted or the fixed rate mentione by the customs in the bill of entry?

2. what is the view of AS 11 in this regard?

3. Also,pls let me know the correct procedure for accounting the imported bills?

expecting the reply at the earliest.

Replies (13)

varun maingi

ca final

72 Points Joined July 2010

as per AS 11

sale /purchase - rate of exchange is transaction date

AND as per custom act date of invoice should be recording date

Plz correct me if i am wrong

CA.B.Sivakumar

162 Points Joined September 2008

Originally posted by : CA.B.Sivakumar

Dear Sir,
We're purchasing imported items for our manufacturing purposes. All import purchase are against 100% advance payment TT.

At the time of advance payment, the vendor account will be debited in INR value. The exchange rate of conversion is the rate given by the bank in thier payment advise.

DR VENDOR 1000$ @ 45 = 45000

CR BANK 1000$ @ 45 = 45000

After 1 month (say 08/08/02011 this is the bill of entry date) we are receiving the consignment, and taking delivery after paying the customs duty to commissioner of customs. Goods received by factory is on 15/08/2011.

Now my question is

1. While booking the invoice what is the exchange rate i should adopt? Whether the exchange rate as on 08/08/2011 is to be adopted or 15/08/2011 rate is to be adopted or the fixed rate mentione by the customs in the bill of entry?

2. what is the view of AS 11 in this regard?

3. Also,pls let me know the correct procedure for accounting the imported bills?

expecting the reply at the earliest.

Thanks

CA Saiyum khan

Practicing CA

690 Points Joined November 2008

The transaction date i.e. custom clearance rate of exchange may be considered for accounting the import purchase in INR. Any exhcange difference may be charged to P&L.

Darshit

Associate at M/s. Haribhakti & Co.

27 Points Joined May 2009

Dear CA.B.Sivakumar

My Query is also same to the extent that which rate should be applied to convert foreign currency into INR i.e. whether rate mentioned in Bill of Import or Bank rate prevailing on such day for booking purchase. As the rates of customs are fixed for a whole month, whereas the bank rates are changing everyday.

Logically while making advance we use the bank rates as per bank advice, then while purchase why not bank rate?

Darshit

Associate at M/s. Haribhakti & Co.

27 Points Joined May 2009

Dear CA.B.Sivakumar

My Query is also same to the extent that which rate should be applied to convert foreign currency into INR i.e. whether rate mentioned in Bill of Import or Bank rate prevailing on such day for booking purchase. As the rates of customs are fixed for a whole month, whereas the bank rates are changing everyday.

Logically while making advance we use the bank rates as per bank advice, then while purchase why not bank rate?

kckinn

759 Points Joined November 2008

You may have a look at https://220.227.161.86/eac/eacfinal/vol22/3.htm

CA PARTH SHAH

In Practice

1951 Points Joined December 2009

Bank rate cant be taken for booking purchase as Custom Act have special provisions mentioneing which rae is to be taken for booking puchase.

jainam shah

Student CA Final

22 Points Joined October 2012

I too have the same doubt..please ans as soon as possibel..otherwise i will get liquited..

sagar

MBA

22 Points Joined June 2015

Debit : - Import Purchase 784302.60 INR

Debit :- Import Duty 45000 INR

Credit Vendor Account 829302.60 INR

Bg amt Import Purchased SGD 17245 @ 45.48t .( Rate on invoice date and on clearance paper mention )

Debit :- Vendor Account 829302.60 INR

Credit :- Bank Account 724290 INR

Credit :- Foreign Exchange Profit 60012 INR

Bg amt paid to Vendoragt bill no... of SSGD 17245 @ 42 ( Todays Bank Rate applicable for Payment , hear we book Profit )

Same as you need to book loss if the foreign exchange currency may higher than the date of purchas.

sagar

MBA

22 Points Joined June 2015

Debit : - Import Purchase 10,000 INR

Debit :- Import Duty 3,000 INR

Credit : Vendour Account

Jaya Sankar Kumar Veluguri

Articles Student

51 Points Joined December 2013

Hi Mr. Darsh*t,

You should account for in books @ customs clearance rate & while making payment you shall use @ bank rate since you will convert that on different date there will be a chance that rate may vary.

the difference between Bank rate & Customs Clearance rate will be adjusted using the provisions of AS11.

sandeep kathayat

accountant

36 Points Joined May 2016

Dear Sagar if you any rule link for booking purpose taken bill of entry please forward me

Masthan Vali S

Articled Assistant

21 Points Joined August 2012

Hi, Any provisions in Customs Act regarding exchange rates or purchases, they are applicable only on calculation of Assessable Value for charging Customs duty. And Customs Act is no way related to accounting of purchases in books of Accounts(ie we follow Accounting Standards).

Correct me if im wrong. Thanks